The Canadian trade minister, the US trade representative and the president were all on board with an agreement, and then the prime minister walked away from it. Stephen Vaughn says the decision was political rather than commercial, and that the offer on the table was better than anything the United States has given anyone else.
"Well I think it's important to understand, they had a deal, right?"
Vaughn is a former US trade official, which means he has sat on the American side of exactly this kind of negotiation and knows what a trade representative will and will not concede.
I listened to the full segment so you can skip it.
Here are the 5 takeaways that matter.
👤 Guest: Stephen Vaughn, a former US trade official, speaking about a negotiation run by the office he used to work in
🎙️ Host: David Asman, guest-hosting Kudlow for Larry Kudlow
📰 Published: 31 August 2026 on Fox Business, and on the Kudlow podcast feed
🟣 Apple Podcasts | ⏱️ 46 min
Key Takeaways
There was a deal, and the prime minister is the one who walked away from it
The trade minister, the US trade representative and the president were all on board
The offer was better than any other country has been given, on the US account
Alberta's premier is friendlier to Washington than the rest, which is a split Ottawa has to manage
Rhetoric is the risk, because a political fight is harder to stop than to start
Betting the negotiation on the midterms may not work, and Vaughn says Ottawa knows it
1. Canada Walked Away
Asman framed the segment around affordability and the midterms, and asked whether Canada is being encouraged from outside to hold out.
Vaughn agreed on the diagnosis without accepting the premise. "Yeah, I don't think there's any question this has become very political. Especially in Canada."
The agreement existed and everyone had signed up to it. "Well I think it's important to understand, they had a deal, right?" He said it is pretty clear the Canadian trade minister, the US trade representative and the president were all on board
The decision to leave it was one person's. He said it looks as though it was a decision by the prime minister to walk away, and that this appears to have been primarily a political call
2. Better Than Anyone Else Got
Vaughn's second point was about what was actually being refused.
"I think the ambassador Greer has made very clear we were offering them a deal that was better than has been offered to any other country and they have decided not to take it."
That is the US trade representative's characterization, relayed by Vaughn, rather than an independent assessment of the terms
His closing thought on it was about endurance. He said the question now is how long Canada is able to hold that position
3. Alberta Is the Friendly One
Asman raised China's warming relations with Canada, and Iran's long partnership with Beijing, and asked why Ottawa would not prefer Washington.
Vaughn's answer was that Canada is not one position. "If anything, the premier of Alberta is more friendly toward the United States than some of the other premiers up there"
Alberta is the province whose economy depends most directly on selling energy into the United States, which is what makes that split matter to the negotiation
He said there are people in Canada arguing to wait and see what the midterms produce before settling
4. Rhetoric Is the Real Risk
Asman noted that the prime minister is also threatening to close oil shipments, and pointed out the mutual dependency: "We get about 4 million barrels a day of oil but if they close oil shipments, they need the gasoline that we send back after we refine that oil, right?"
Vaughn did not engage with the barrel counts and went to the dynamics instead. "Well I think you've seen this happen many times people sometimes start a political issue and then it gets more, it's not so easy to control the rhetoric."
He described a domestic constituency that has to be answered. A great many Canadian voters are exercised about this, he said, and there is a real temptation for the government to use strong language
His underlying view is that the commercial logic wins. "But I still believe at the end of the day, both governments understand the importance of a deal and they basically have a deal" — what is left is when Ottawa is prepared to take it
5. Betting on the Midterms
Asman put it to him that Canada is waiting to embarrass the president at the midterms, with China and the European Union watching for any leverage the tactic produces.
Vaughn's answer was that the bet is not a safe one. "It's one thing to say that you're confident you'll gain leverage as a result of the mid-terms, but it's not the mid-term elections yet we don't know how that comes out."
The scenario he raised runs the other way. "President Trump may come out of the mid-terms looking stronger than he did before." In that case, he said, people in Canada may start telling themselves the Republicans could win again in 2028
On whether a deal lands before November, he would not commit. "I think it's really going to depend on sort of what pressure they're feeling in Canada and also sort of how they see the mid-terms going" — and he said that right now they intend to hold out until they see
Asman's closing point was about precedent — that the US trade representative will not concede here because of what it would signal to every other partner still negotiating — and Vaughn did not disagree
Bonus Insights
The segment carried no numbers from the guest at all. Every figure in it is Asman's, including the 4 million barrels a day, which is why this summary attributes it to the host rather than treating it as Vaughn's estimate
Vaughn's bottom line is that the substance of a US-Canada agreement is settled and only the politics are not: Ottawa walked away for domestic reasons, is holding out for a midterm result it cannot predict, and both governments still know they need the deal.
If this was worth your time, send it to someone who has to have a view on this.
Get the latest market chatter as it happens: